Los Angeles, California | April 30, 2020
Overview of the Fund and The Market
We had our first financial closing of investment capital on January 31, 2020. We are happy to report committed capital of over $7MM, with a portion of that from the General Partner. Our fund will be open to new investors for the year of 2020, unless the General Partner closes the offering sooner.
With the onset of COVID-19 and the related economic lockdown, we believe there will be a buying opportunity for well-located Class B assets with continued demand by workforce tenants. So far, the real estate industry has been impacted less than many other industries. Overall, across our whole managed portfolio, we have collected 92%+ of our apartment rents.
We believe the opportunity to deploy capital in the near-term will be borne from the size and fragmentation of the overall real estate market, and the continued need for affordable housing for the working class in our country. A recent report from National Multifamily Housing Council (NMHC) reports that the multifamily market has over 21 million buildings in the US, and the 50 largest investment companies control less than 10% of these buildings. We look forward to buying solid properties with upside soon.
For the past 26 years, Apartment Income Investors has used disciplined underwriting and our proprietary business model to generate significant returns to our investors. We plan to continue this strategy as we deploy into the market at this time of uncertainty.
We have one new investment, the Village at Moorpark, which closed escrow on February 25, 2020. We invested $600K for our first investment. Even though the lockdown happened shortly thereafter, this asset is in great demand, has positive cash flow, and a clear path to upside valuations.
Summary of the Fund Investments
We will use this section to share progress on the individual investments and report our progress. As of this writing, most of the assets are in cash, our money market account. We have the one investment of $600K, and it has been our long-time policy to value investments at cost for up to 12 months; this policy helps mitigate the short-term valuation shifts that can often occur after a change of ownership and management.
While uncertainty and change are in the forefront of our daily tasks, the certainty that comes from the steady demand for workforce housing is limiting volatility in our sector. And helping provide housing to working Americans is a noble endeavor; we are honored to provide this service in a professional and compassionate manner.
Overall, we are very excited about the progress made in the first quarter of 2020: a closing of investment capital, and a closing on a solid investment. We will be underwriting new acquisitions. More interesting and positive news to come.
Please call or email anytime with questions or comments.
Michael D. Chesser, Manager
Aii Capital Management, LLC
About Apartment Income Investors and the Transformation Housing Fund
For the past 26 years, Apartment Income Investors has used disciplined underwriting and our proprietary business model to generate significant returns to our investors. We plan to continue this strategy as we deploy capital into the market at this time of uncertainty.
The Transformation Housing Fund was created to invest in value-add properties with a clear path to improved operations and increased valuation. The business plan generally requires active management by the property sponsor. Apartment Income Investors (Aii) has a 26-year track record of acquiring and repositioning properties. The target properties should provide a positive cashflow yield from rental operations, as well as a lift in value through renovation and improved rental operations. Acquisitions will support a total net return target of a 2X equity multiple and an IRR in the 18% range. The General Partner is actively pursuing investments that meet these requirements.